Debt Ceiling 2013: Cutting MedicareWould Balance Budget More Than Raising Medicare Eligibility


President Barack Obama’s fifth State of the Union address will be given on February 12, and there is little doubt that one of the key issues that he will frame is the upcoming debate on the debt ceiling.

The president will certainly insist that we need to reduce the deficit while keeping Medicare, Social Security, and Medicaid – programs that keep millions of low-income Americans stable – from major cuts.

Republicans, however, are set to propose their own vision for the future of the country, led by congressional Republican and deficit-reduction stalwart Paul Ryan (Wisc.), who is still proposing major reductions to the Medicare budget.

There’s a lot of troubling aspects to Ryan’s proposal, not least of all the “incredibly large cuts to education, health care, job training, national parks, funding for fire fighters and police” he thinks will solve the deficit.

But one of the more alarming segments to his proposal is a decision to offload the federal government’s obligation to seniors via the Medicare program. Ryan and other conservative politicians and lobbying groups want to raise the Medicare eligibility age to 67 over the coming decades, supposedly because it would save the country a great deal of money.

Raising that age would save the federal government approximately $5.7 billion a year – $50.7 billion over the course of 10 years. And raising the Medicare eligibility age would result in increased costs to the healthcare system at large, due to the two-year gap that would emerge between retirement and government-sponsored access to health care services.

As Wendell Potter observes, the Kaiser Family Foundation concluded that retirees would pay approximately $2,200 more in health care during that two-year period than they would under coverage by Medicare. Meanwhile, pushing those people back into the private insurance market would raise premiums for the health market at large. Additionally, raising that age would push more people to seek qualified subsidies under the Affordable Care Act – money that will go straight to insurance companies, rather than health care providers.

Raising the Medicare eligibility age would increase costs to seniors, while saving a dubious amount of money.

But according to the Congressional Budget Office, ending corporate tax loopholes would generate $114 billion over that same time period – about twice as much as raising the Medicare age.

Ryan’s budget also planned on closing those loopholes, but the congressman repeatedly refused to outline any specific plan by which those loopholes would be closed.

The Progressive Change Campaign Committee has a proposal, however: “subject all income earned by foreign subsidiaries of U.S. corporations to U.S. tax laws by limiting or eliminating deferrals for overseas profits” – a change that would raise the aforementioned $114 billion.

If Republicans were serious about reducing the deficit, they’d be talking less about cutting Medicare – a program that saves huge amounts of money compared to private insurance – and more about tax loopholes, but apparently they’re more interested in protecting corporate profits than America’s seniors.